Third weekly fall but fu­ture bright

A third weekly drop in wool prices sent the Eastern Mar­ket In­di­ca­tor down 6 cents to close at 1738c/kg clean last week, but fore­casts of eco­nomic growth look pos­i­tive for wool.

Na­tional Coun­cil of Wool Sell­ing Bro­kers of Aus­tralia ex­ec­u­tive di­rec­tor Chris Wil­cox said it seemed to be a week of ad­just­ment be­tween sell­ing re­gions.

“While fine wool val­ues dif­fered be­tween re­gions, one fairly con­sis­tent cat­e­gory was 20 to 23-mi­cron wool, which mostly recorded in­creases across the three sell­ing cen­tres,” he said.

“The odd­ment mar­ket again fell back, al­though not to the same dra­matic ex­tent seen the pre­vi­ous week. The Western Mar­ket In­di­ca­tor eased back 2 cents to 1819c/kg.”

At the wool stores last week, Gillingarra wool and sheep pro­ducer Jim Kelly wit­nessed his Rush­holme clip auc­tioned through El­ders to a top price of 1155c/kg greasy for two bales of 19.1-mi­cron fleece wool with a length of 79mm and yield of 60.7 per cent.

Mr Kelly, his fam­ily and part­ner Ja­nine Var­ley run 2500 Merino breed­ers, which are bought in as part of a year-round cross­breed­ing pro­gram us­ing Poll Dorset rams.

“The sheep are kept in good con­di­tion on pad­docks of blue and white lupins plus sum­mer salt grass and essen­tial min­eral licks,” he said. “We re­ceived the best prices for our wool since the early 1990s and my con­fi­dence is back.”

Mr Wil­cox said a pos­i­tive out­look for the wool in­dus­try was also sparked by the World Bank and the In­ter­na­tional Mone­tary Fund, both lift­ing their fore­cast for world eco­nomic growth in 2018.

“The World Bank now pre­dicts that the global econ­omy will grow by 3.1 per cent in 2018, up from 3 per cent in 2017 and 2.4 per cent in 2016,” he said.

“It also lifted its fore­cast for eco­nomic growth in 2019.

“The bank ex­pects that ad­vanced economies will see much stronger growth in 2018 than pre­vi­ously ex­pected, led by the eu­ro­zone coun­tries (0.6 per cent higher) and the US (0.2 per cent higher), al­though China only slightly up by 0.1 per cent.

“Th­ese higher growth fore­casts are pos­i­tive for wool, as long as the higher eco­nomic growth flows through to im­proved con­sumer spend­ing.”

Mr Wil­cox said the lat­est data avail­able from China on its ex­ports of wool prod­ucts for Novem­ber 2017 was mixed.

“Af­ter a strong rise in ex­ports of wool-wo­ven cloth­ing from Novem­ber 2016 to July 2017, ex­ports have de­clined for each month over the past four months,” he said. “There was a 28 per cent drop in Novem­ber, with de­clines in ex­ports to all of the ma­jor des­ti­na­tions, with the ex­cep­tion of South Korea.

“Even so, ex­ports of wool-wo­ven cloth­ing in 2017 to Novem­ber was still 63 per cent higher than for the same pe­riod in 2016.

“In fact, 81 mil­lion pieces of wo­ven wool gar­ments for the 11 months, it’s the high­est vol­ume of th­ese gar­ments for this pe­riod since 2008.

“Wool knitwear ex­ports lifted in Novem­ber by 8 per cent year on year, the first monthly in­crease since Jan­uary.

“There were large in­creases in ex­ports to the Euro­pean Union, South Korea and Hong Kong.

“For the 11 months to Novem­ber, China’s ex­ports of wool knitwear were down by 11 per cent, led by the US (down 26 per cent).”

Turn­ing to China’s im­ports of raw wool, Mr Wil­cox said data for Novem­ber showed a 41 per cent year-on-year lift, led by a 136 per cent in­crease in im­ports from Uruguay and an 82 per cent in­crease from other coun­tries.

“Im­ports from New Zealand were 22 per cent higher, while im­ports from Aus­tralia were 23 per cent higher,” he said.

The El­ders In­ter­na­tional Wool Re­port brought the North­ern Hemi­sphere’s cold weather into the equa­tion, say­ing most of China was hov­er­ing around zero de­grees.

“Adding to this lack of global warmth is the sus­tained uni­form busi­ness in China is keep­ing worsted fab­ric pro­duc­tion mov­ing,” the re­port said. “Adding to the Chi­nese uni­form busi­ness have been the Korean Win­ter Olympics and also the Ja­panese Sum­mer Olympic uni­forms re­quired to be made from scratch.”

With 100 mil­lion view­ers watch­ing the US Su­per Bowl LII tak­ing place in one of the cold­est ar­eas of North Amer­ica this week, the stage was set for the nat­u­ral warmth of wool to be aired.

Aus­tralian Wool In­no­va­tion chief ex­ec­u­tive Stu­art McCul­lough said it was un­for­tu­nate com­mer­cial air­time was too ex­pen­sive (a 30-se­cond com­mer­cial is over $5 mil­lion), al­though he did not rule out a fu­ture Su­per Bowl spot­light.